A voter casts his ballot in Bouchaoui, on the outskirts of Algiers, during the 2021 parliamentary election. AFP
A voter casts his ballot in Bouchaoui, on the outskirts of Algiers, during the 2021 parliamentary election. AFP
A voter casts his ballot in Bouchaoui, on the outskirts of Algiers, during the 2021 parliamentary election. AFP
A voter casts his ballot in Bouchaoui, on the outskirts of Algiers, during the 2021 parliamentary election. AFP

Algeria's presidential election dominated by domestic issues


Ghaya Ben Mbarek
  • English
  • Arabic

As Algeria gears up for its presidential election in September, it is working to solidify its role as a major power in Africa and, ultimately, establish itself as a key player on the global scene, particularly through its seat at the UN Security Council.

Due to continuing conflicts in neighbouring North Africa and Sahel countries, namely Niger, Mali and Libya, Algeria has repeatedly tried to act as a mediator among the conflicting parties in these countries.

Last month it was announced that an early presidential poll would be held on September 7 and the National Independent Elections Authority will be called to convene from June 8 to begin official preparations.

In an interview with state-owned media last week, President Abdelmadjid Tebboune dismissed any suggestions of a hidden agenda related to his declaration of an earlier election date, saying the move was strictly "technical". He clarified that September traditionally marks the period for presidential elections in the country, noting that the 2019 poll, held in December of that year, was an exception due to the political circumstances at the time.

Following the resignation of the late president Abdelaziz Bouteflike in 2019, and months of protests demanding reforms that caused an unstable political scene, it was rendered difficult to hold elections on the usual date of September and was pushed instead to nearer the end of the year.

No announcement has yet been made by the incumbent about his intention to run for a second term.

"These elections are an indication of Algeria's stability, its attempt to finish its institutional building and its assumption of its responsibility as a regional actor," Algerian affairs and security expert, Ahmed Mizab, told The National.

“Strengthening the region’s capabilities and ensuring its resilience to rising crises is among the top priorities that are expected to take centre stage for any candidate during these elections."

Almost 24 million eligible Algerians in more than 58 governorates across the country are expected to vote. In excess of 13.000 polling centres will be in use. In its most recent legislative elections in 2021, Algeria registered its lowest participation rate in history, with only 23 per cent of voters showing up.

Challenges

Despite Algeria’s geopolitical importance in the region and its rise as an international player following its mandate as a non-permanent member of the UN Security Council, the nation still faces several domestic challenges.

Official figures indicate a tough economic situation, with a rise in public spending and a budgetary deficit of almost $45 billion.

US-based think tank, the Middle East Institute (MEI), says such challenges are expected to be a "key priority for any presidential candidate in the next few months".

"The difficult financial situation of the public treasury will inevitably require a national dialogue between the authorities and various economic actors over how to reform the current economic model," MEI said in an analysis.

These remarks are no surprise since experts have repeatedly highlighted the rigidity of Algeria’s economic model, which has remained almost unchanged for decades. Algeria has continued to spend most of its oil and gas money on subsidies and regulation of the private sector.

The question of freedom also presents a significant challenge.

Algerian President Abdelmadjid Tebboune, right, pictured with African Union President Macky Sall in 2022, has yet to announce his intention to run for a second term. EPA
Algerian President Abdelmadjid Tebboune, right, pictured with African Union President Macky Sall in 2022, has yet to announce his intention to run for a second term. EPA

Since taking power in 2019, and despite the pro-democracy Hirak movement, Algerians continued to face repercussions with many opposition voices from politicians, activists and journalists facing trials due to their personal stances towards the current regime.

Despite these domestic challenges, Algerians feel they have limited options in the September elections. According to MEI, this is mainly because "all sides of the opposition lack perspective and seem unable to provide an alternative to the current administration".

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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